from the not-there-yet dept

It's great to see Amazon launch its music service (cloud player) in Europe. Normally we should be rejoicing the news of more competition in the user-friendly supply of digital content. However, European music and film fans have become accustomed to disappointment pretty much every time such an announcement is made for one obvious reason: you know you need to check into which handful of countries the service will actually be launched.

In the case of Amazon, the service is initially only offered in three countries: the UK, France and Germany. iTunes, similarly, had a very slow start in 2003 and dealt with 8 years of negotiations to overcome the insane hurdles the European copyright system poses. After 6 years of very gradual expansion, Spotify is nearly half way to getting there.

The snail’s pace roll out of online media services to other countries in the supposed “biggest single market in the world” is mainly due to the fragmented markets for copyright licenses. In the European Union, there are 27 different national copyright systems, one for each Member State. Each system has their own set of collecting societies, which represent the world repertoire of music exclusively for their territory.

For a music service such as Amazon’s cloud player to roll out into Europe, this means it has to negotiate licenses for each country. No pan-European licenses exist at this moment. To make matters worse, it's not just one license per country, but typically between three to seven licenses, each requiring a separate negotiation, in each territory. Terms need to be agreed with 1) several collecting societies, 2) publishers, 3) record companies and since 2005 – after an interesting EU initiative, which backfiredhard – 4) with the big record companies setting up their own collective licensing companies for their publishing divisions. Multiply times 27. And try not to cry.

There is a proposal on the table, which aims to solve this chaos with multi-territorial licenses. However, as we have discussed before, there are many problems with collective rights management and the proposed legislation. It will probably take longer to officially adopt the legislation enabling multi-territorial licenses to be agreed upon than for Amazon to complete the arduous European negotiations.

Companies like Apple, Amazon and Spotify are able to pay lawyers and negotiators for these lengthy negotiations. But could a bunch of guys in a garage who have developed the (potentially) next big thing in digital content distribution accomplish the same? It is highly unlikely, and therefore a huge opportunity cost for innovation due to short sightedness.